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Avoiding IT Overspend

BY Marianne Wilson

The strategic role that IT plays in retail is evident as retailers across the board continue to up their technology investments. And with retail innovation being driven largely by tech-related advances in customer analytics, mobile and social commerce, and cross-channel strategies, IT spending is expected to remain a top priority.

But with increased investment comes the risk of overspending, warned NPI, a spend-management consulting firm that works with large retailers to maximize IT and telecom spending.

“In the first half of 2012, NPI witnessed an increase in overspending as retailers invested in new IT initiatives, as well as the infrastructure upgrades they typically drive,” said Jeff Muscarella, executive VP IT, NPI, Atlanta.

Key to maximizing IT investment spend, Muscarella said, is to match your business needs to the product or service that is being sold and to think the process through. Equally important: Planning far enough ahead so that you can buy on your time line.

“Buy at opportune quarters and at quarter ends,” he added. “And always make sure you don’t overbuy.”

These are some of the top ways that retailers will overspend on IT in the next 18 months, according to Muscarella:

• Overbuying Support: In many instances, retailers buy more software and hardware support than they need or fail to evaluate third-party support providers.

• BI/Customer Analytics: These are big ticket items, and you need to take a rigorous approach as to what you really need to accomplish with your business objectives, Muscarella said, as opposed to taking a scattershot approach.

• Fixed-fee Engagements for Professional Services: NPI recommends bidding them on a time- and materials-basis to better understand the cost.

“The ability to approach it from a time- and materials-basis instead of a fixed-fee reduces your risk and gives you insight into how the company prices the project,” Muscarella added.

• E-commerce Platforms: It’s no secret that scalability, mobile shopping and mobile payments are forcing large-scale upgrades and new investments in this area.

“You need to do it, but it’s important to understand what you need and to buy only what you need,” Muscarella said.

• SaaS: Minimum purchase clauses, data ownership/migration costs and renewal rate increases have some companies negating the short-term savings of SaaS before the ink is dry, according to Muscarella.

“SaaS is great if you have a standard set of needs that are well defined and aren’t going to change too quickly,” he added. “But for something that is new and unique, you might want to have it in-house for a while and then later move it to a SaaS model.”

• Wireless and Data Networking: The average enterprise overspends by 20% to 50% on wireless, according to NPI, with the top culprits being paying consumer rates, not negotiating for incentives, failure to pool minutes and failure to audit usage monthly. For data, high pricing and inadequate planning are common, as retailers hastily invest in solutions such as WDM and HA. IT and sourcing teams should partner to analyze their long-term bandwidth needs for maximum negotiation leverage.

• Storage: High demand and lack of enterprise planning give vendors the upper hand in this category.

“Retailers are spending a lot on storage, which is catching them by surprise because of how fast it is growing,” Muscarella said. “To get a better deal, you need to predict your storage needs well in advance of when you buy it. You should have a six-month road map of your storage needs.”

• End-User Computing: For many retailers, POS terminals, desktops, laptops and software are in dire need of upgrades and updates. And given the interest in mobile retail strategies and payments, retailers are “mobilizing” the entire retail experience in the next 18 to 24 months.

“Before IT buyers invest in upgrades, they should establish how new computing trends will factor into their long-term strategy,” Muscarella said. “You don’t want to spend money on a technology that could be outdated in a year.”

But many retailers can’t wait. They need to upgrade their POS equipment now.

“Knowing which technology will win with your customer really comes back to knowing your customers’ needs,” Muscarella said.

[email protected]

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The Cash Office Goes High-Tech

BY CSA STAFF

Traditionally, cash office management and the reconciliation process have relied on manual procedures, such as counting currency and coin by hand, creating handwritten check deposits, and keying totals into the POS system. Many retailers have used the same cash office procedures for years, with the procedures inconsistently executed from store to store. Chain Store Age talked with Balance Innovations’ Janette Davis about how technology is bringing new efficiencies to cash office management.

What is the biggest mistake retailers make when it comes to cash office management?

One of the most interesting statements we hear from almost all of our customers in the beginning is that they don’t think they have a problem in their cash offices. They are looking at ways to solve a few issues, like managing safes. When we work with retailers, we step back and review the entire cash office and reconciliation process. Retailers see our analysis of their daily processes — till balancing, deposits, check processing, etc. — and realize their current methods aren’t efficient. They are struck by just how much the inefficiency is costing them and how much of it is consuming their day. Many are skeptical that a technology solution can help them solve these issues. After we show them how Balance Innovations can save them up to 60% in labor costs, among many other benefits, they are eager to implement a VeriBalance pilot program in their stores.

What are the drawbacks and benefits of outsourcing cash counting and check processing?

Some retailers choose to outsource cash counting and check processing to save labor hours or to reduce cash touches within the stores. While this may seem to be a more convenient solution, there are many drawbacks — primarily cost. Banks charge exorbitant fees for these services, and you lose the ability to follow up on discrepancies, such as an over/short or a missing check, at the store level on the day they occur. Outsourcing these processes takes the control away from the retailers, and it doesn’t address the store-level issues that prompted outsourcing in the first place.

Reconciling at the store level is more efficient because bookkeepers are able to rectify issues much more quickly by researching the problem with the staff on site. If reconciliation is done at corporate or at a district office, it can be days or weeks until a discrepancy is identified, and resolution is more difficult because so much time has passed.

How does Balance Innovations help retailers with their cash office management?

Through its simplified, automated processes and its integration with the POS, our VeriBalance program significantly reduces the time needed to complete bookkeeping tasks, allowing retailers to redirect their teams to other activities, such as working with customers.

Rather than requiring cash office personnel to manually count cash, balance checks and process credit and debit, our solution integrates in real time with the point of sale, pulling totals and reconciling them with till contents. Balance Innovations’ solutions reduce shrink through improved accountability of cash management functions, providing an audit trail and historical research capabilities.

What type of impact, if any, do self-checkouts have on back-end practices in this area?

Managing, monitoring, balancing and forecasting the cash held by self-checkout terminals is a manual and time-consuming process for the cash office.

Our solution, vbScout, automates the balancing and reconciliation of self-checkout terminals and allows the cash office to monitor the level of cash and coin in each terminal. It alerts the user to low cash or coin conditions and also provides notification as cash acceptors approach their thresholds. The combination of the two technologies reduces the frequency of balancing the terminals and downtime for the customer caused by out-of-cash conditions or full acceptors. vbScout also eliminates manual balancing errors by guiding bookkeepers through a step-by-step process of balancing each terminal.

How does your back-office check conversion work?

vbEPIX enables retailers to implement back-office check conversion, providing total reconciliation. It works in conjunction with our VeriBalance cash office solution and is integrated in real time with the chain’s POS system.

All check types can be imaged with vbEPIX with no user decisioning. This check conversion solution leverages POS transactions to ensure all checks are balanced and reconciled. Corrections occur at the store level, ensuring deposits are accurate.

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App Essentials

BY Staff Writer

The life of any top-level retail executive is hectic, but there’s a whole host of mobile app tools to help manage everyday tasks and ultimately boost efficiency.

From keeping track of to-do lists and meetings to eliminating paper receipts needed for expense reports, here are eight essential iOS and Android apps every retail exec should download — and actually use:

Evernote: This note-taking app can be a lifeline for retail executives. Whether in a meeting, on a train or unwinding on the couch at night, Evernote is a key platform for jotting down notes by voice, text or photos. In addition to housing a place for ideas, it keeps track of to-do lists and keeps you organized, without having to bug an assistant for calendar updates.

Bonus: Evernote is newly integrated with Livescribe, a Wi-Fi-enabled smartpen ($169.95), which records what you hear during meetings and syncs it up with the notes you take. (So if you tap the pen to notes at a later time, the recorded audio matches what was said at that time.) Because the Livescribe pen works with Evernote, users can access everything directly via the app.

Dragon Dictation: For execs who are more orators than pen-to-the-paper writers, Dragon Dictation is a speech-recognition app that translates what’s said into notes. So if there’s an hour to spare in the car to work on a speech, this app simplifies the process and serves as an on-the-go virtual secretary.

Dropbox: This cloud-based app syncs documents, photos and media files remotely, so dragging data from a PC or mobile platform to a Dropbox account allows users to access them while on the go. Dropbox is also shareable between users. Need to approve that document before it’s presented at a conference? Pop it into the app and make necessary changes without actually downloading data-sucking files.

Twitter: As Twitter CEO Dick Costolo recently said at a San Francisco tech conference, the biggest misconception about the micro-blogging site is “that you have to tweet to use [it].” By following key retail journalists and publications — Chain Store Age included via @ChainStoreAge — you can get the most up-to-date news in real time and stay ahead of the curve. Monitoring brand competitors on Twitter is also valuable for keeping track of merchandising strategies, especially during the holiday shopping season.

Flipboard: There’s a good reason why Flipboard has been among one of the most-downloaded apps for about two years. Along with a beautiful, streamlined interface, the app packages the top news on the Web into a magazine-style reading format, allowing users to flip through headlines like turning pages in a book. It’s also customizable, so the app presents the most relevant news based on interests and industry (e.g. brand marketers are presented with different articles than a financial executive would see).

Pocket: Another news consumption app worth downloading is Pocket, which saves articles, videos and Web pages and gives you access to them at a later time, even when you’re offline such as taking a flight.

CamCard: This business card reader app for Android users scans images taken from a smartphone camera and automatically saves them as contacts to a mobile address book. This means taking a picture of a business card will ensure you’ll never lose important contact information again.

Expensify: For avid business travelers, Expensify automates the entire expense report process so you can be reimbursed quickly and avoid carrying around piles of receipts. The app syncs with the user’s credit cards and bank accounts to keep track of purchases and creates digital copies of paper receipts. Meanwhile, when a credit card is used, items paid for in cash can be documented digitally via the app’s scanner feature.

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